Michael Kors isn't very happy with the excessive discounts department stores give on its products. CEO John Idol says that come February, the brand will no longer participate in family-and-friends sales or accept coupons for its products. Michael Kors plans to cut back on the amount of merchandise it ships to department stores in an effort to rebuild the pricing power it's lost with shoppers. Because the brand is constantly on sale, consumers have forgotten the true value of the product, Idol said.
Total Retail’s Take: Michael Kors is following in Coach’s footsteps. Coach announced earlier this week that it will close about 25 percent of its North American department store locations to protect its name as a luxury brand and avoid discounting of its products. Although Michael Kors’ products won’t be pulled entirely from any locations, the brand will have more control over the prices charged for its handbags and accessories. The strategy here is selling fewer units at higher prices, and protecting its brand image in the process. It will be interesting to see if this strategy works out for Michael Kors (and Coach, for that matter).